Regulators gone mad: Ban Bitcoin before the bubble bursts

ON THE the one hand, the world’s regulators are creating havoc in the financial markets. On the other, they are seriously neglecting the harm that Bitcoin is creating.

They are disrupting the free flow of investment around the globe with ever more data collection, with banks and others asking ever more personal questions to add to their data bases.

What happens when those data bases get hacked?

HSBC is closing down some of its facilities to those who refuse the 45-minute telephone interview.

It is almost impossible to open an account to trade in stocks and shares without completing a detailed money-laundering fact find. They want hard or certified passport copies along with other documents in many cases.

For example, in some countries you will also need a driver’s licence, birth certificate, social security or tax ID numbers, employment information, proof of address, maybe a marriage certificate, and so on. There are other requirements and regulations that need to be fulfilled as well.

In fact, a friend of mine says he can only get paid by Bitcoin transfer because regulators say that money-laundering is using small recurring payments like his.

As for pension funds – there is a problem in the UK if you want to move your fund – you must get a financial adviser to approve the move and then you must pay annual fees on the fund to that adviser, a free gift to the already well off.

BITCOIN NEGLIGENCE

And if banning money laundering is the main concern, and if managing the stock of money in circulation is a key part of monetary policy, why are they not banning Bitcoin?

One day, they must.

MAXIMISING THE DAMAGE

By not banning Bitcoin, they are allowing the bubble to grow so that as many people as possible get hurt when, eventually they realise that they must ban it simply to have space to manage their own monetary policy.

It is fair to say that the facility provided by Bitcoin is extremely important – it enables money to cross frontiers very fast, whereas if you use your traditional method you run into a lot of administration (regulations again) and it takes time.

Central banks ask what the money is for, and where did it come from. You can tell a lie – they will not even know. It is a waste of everyone’s time.

You can allow your bank to do this for you and they will give the answers for you, but then they can make a LOT of commission.

Take 3% of all international transactions in a day and give it to the world’s banks as a commission and you may have given them 3% of trillions. What have they done to earn that much? Made friends with the regulators maybe. It is an ugly world, this world of regulators.

REGULATIONS HARM COMPETITION

Regulators put me out of business along with hundreds of other small investment managers in the UK in the 1990s. Instead of creating my Niche Platform to enable financial advisers to manage client money without touching it – ever – they increased the capital requirements of those advisers, so the smaller ones taking less in fees, sold out to the biggest, and often the worst ones.

(National Investment Clearing House, my Niche Platform, is a government guarantee against fraud and a way to move money fast from one investment class to another, one fund manager to another, one stock broker to another or from shares to cash to your bank. It would pay for itself using interest on overnight money. The DTI set up a meeting with representatives of all stakeholders. I attended as the originator. Then I had to emigrate because I had to retire because of those regulations I mentioned, and they forgot about it as a new financial crisis hit home.)

I had to sell out. Yet my track record on published comparisons shows that I constantly outperformed all institutional competitors doing the same things.

For your information, there are currency brokers who can and do move money for you across currencies for a fee of as little as 1% - even less. I’m happy to name names if you contact me.

• Edward C D Ingram is the founder of the Ingram School of Economics, a school which is growing in influence. He is also provider of the world's first ever certified course in macro-economic design and management. Contact him on Skype at edwarding2.